Question

The management of Zigby Manufacturing prepared the following estimated balance sheet for March 2017 ZIGBY MANUFACTURING Estimated Balance Sheet March 31, 2017 Assets Cash $ 30,000 464, 100 98,505 450,840 1,043,445 620,000 (160, 000) 460,000 $1,503,445 Accounts receivable Raw materials inventory Finished goods inventory Total current assets Equipment, gross Accumulated depreciation Equipment, net Total assets Liabilities and Equity Accounts payable Short-term notes payable Total current liabilities Long-term note payable Total liabilities Common stock 206, 405 22,000 228,405 510,000 738,405 345,000 420,040 765,040 $1,503,445 Retained earnings Total stockholders' equity Total liabilities and equity To prepare a master budget for April, May, and June of 2017, management gathers the fpllowing information a. Sales for March total 22,100 units. Forecasted sales in units are as follows: April, 22,100; May, 19,100; June, 19,500; and July, 22,100. Sales of 250,000 units are forecasted for the entire year. The product's selling price is $30.00 per unit and its total product cost is $25.50 per unit. b. Company policy calls for a given month's ending raw materials inventory to equal 50 % of the next month's materials requirements The March 31 raw materials inventory is 4,925 units, which complies with the policy. The expected June 30 ending raw materials inventory is 4,500 units. Raw materials cost $20 per unit. Each finished unit requires 0.50 units of raw materials.

Answer 1

Ques 1 Sales Budget April May June Budgeted unit Budgeted Unit Budgeted sales price total dollars 22100 $ 30.00 $ 663,000 19100 $ 30.00 $ 573,000 1 19500 $ 30.00 S 585,000 Ques 2 Total Next months budgeted sales Ratio of inventory to future sales Budgeted ending inventory Budgeted unit sales Required units available for production Beginning inventory(units) Units to be produced Production Budget April May 19,100 80% 15,280 22.100 37,380 (17,680) 19,700 June 19,500 22,100 80% 80% 15,600 17.600 17,680 19.100 1 19.500 34,700 37,180 (15,280)| (15,600) 19,420 21,580 60,700 Ques 3 June Total 19.420 Raw materials budget April May 19,700 0.50 9,850 4,855 14,705 (4,925) 9,780 $ 20 $ $ 195,600 $ Production budgetunits) Material requirements per unit Materials needed for production Budgeted ending inventory Total materials requirements units) Beginning inventory Materials to be purchased Material price per unit Total cost of direct material purchases 21.580 0.50 10,790 4,500 15,290 0.50 9,710 5,395 15,105 14,855) 10,250 20 205,000 (5,395) 9,895 20 197,900 S $ $ $ 29,925 20 598,500 Ques 4 Total Budget Production units) Labor requirements per unit hours) total labor hours needed Labor rate(per hour) Labor dollars Direct Labar budget April May 19,700 0.5 9,850 $ 25 $ $ 246,250 $ June 19,420 21,580 0.51 0.5 9,710 10,790 25 $ 25 242,750 $ 269,750 $ S 30,350 25 758,750 Ques 5 Total Labor hours needed Variable factory overhead rate Budgeted variable overhead Budgeted fixed overhead Budgeted total overhead Factory overhead budget April May 9,850 $ 3.50 $ $ 34,475 $ $ 25,290 $ $ 59,765 $ June 9,710 1 0,790 3.50 $ 3.50 33,985 $ 37,765 25,290 $ 25,290 59,275 $ 63,055 $ S S 106,225 75,870 182,095 Ques 6 Budgeted sales Sales commission percent Sales commissions Sales salaries Total selling expenses Selling expense budget April May 1$ 663,000 $ 6% $ 39,780 S $ 4,000 $ $ 43,780 $ June Total 573,000 $ 585,000 691 6% 34,380 $ 35,100 $ 4,000 $ 4,000 $ 38,380$ 39,100 $ 109,260 12,000 121,260 Ques 7 Salaries Interest on long term loan total expenses General & Admn expense budget April May June 22000 22000 4590 45901 26590 26590 Total 22000 4590 26590| 66000 13770 79770||

Ques 8 Total budgeted sales Cash sales(25%) Credit sales(75%) April $ 663,000 $ 198,900 $ 464,100 May $ $ $ June 573,000 $ 585,000 171,900 $ 175,500 401,100 $ 409,500 June 171,900 $ 175,500 464,100 $ 401,100 636,000 $ 576,600 113,280 636,000 749,280 June $ 191,975 $ 576,600 $ 768,575 Total cash receipts from customers April |May Current month cash receipts $ 198,900 $ collections of receivables $ 464,100 $ total cash receipts $ 663,000 $ Cash Budget April May Beginning cash balance $ 30,000 $ Cash receipts from customers $ 663,000 $ Total cash available $ 693,000 $ Cash disbursements: Raw materials $ 206,405 $ Direct labor $ 246,250 $ variable overhead $ 34,475 $ sales commisiions $ 39,780 $ sales salaries $ 4,000 $ general & admn. $ 22,000 $ Dividends $ Loan interest $ 220 Long term note interest $ 4,590 $ Purchases of equipment 195,600 $ 242,750 $ 33,985 $ 34,380 $ 4,000 $ 22,000 $ 20,000 205,000 269,750 37,765 35,100 4,000 22,000 4,590 $ $ 4,590 140,000 Total cash disbursements Preliminary cash balance Additional loan(loan repayment) Ending cash balance $ $ $ $ 557,720 $ 135,280 $ 22,000) 113,280 $ 557,305 | $ 191,975 $ $ 191,975 $ 718,205 50,370 19,630 70,000 June Loan Balance-Beginning of month Additional loan/(repayment) Loan balance-end of month Loan Balance April May $ 22,000 $ (22,000) $ - $ $ $ 19,630 19,630 -

Income statement IŚ 1,821,000 (1,547,850) 273,150 $ Sales Cost of goods sold Gross Profit Operating Expenses General and adminstrative salaries Interest expense Long term note expense Sales commissions Sales salaries Depticiation Tota; operating expenses Income before taxes Income tax @40% Net income $ $ $ 66,000 220 13,770 109,260 12,000 $ 201,250 71,900 28,760 43,140 Balance sheet Cash Accounts receivable Raw Material Inventory(4500*20) Finished goods inventory(17680*25.50) Total current assets $ $ IS 70,000 409,500 90,000 450,840 1,020,340 760,000 Equioment, gross (620000+140000) Acc. Dep(160000+25290*3) Equipment ,net Total assets (235,870) 524,130 1,544,470 Accounts Payable Short term Notes Income tax Payable Ttoal Current Liabilities 197,900 19,630 28,760 246,290 Long term notes payable Total Liabilties 510000 756,290 345000 443,180 Common Stock Retaines earnings (420040+43140-20000) Total Equity Total Liabilties Equity 788,180 1,544,470